Thursday, May 19, 2011

Self-Interest and Older Americans

[NOTE: The post below contains corrected text. In the fourth paragraph, I originally wrote that the estimated aggregate medical cost increase under the Republicans' proposed plan to replace Medicare with vouchers was $20 billion or $34 billion, depending on the underlying assumptions. The correct numbers are $20 trillion and $34 trillion.]

-- Posted by Neil H. Buchanan

According to the conventional wisdom, America's elderly are a bunch of selfish, overfed whiners. "The Simpsons" has captured the essence of this myth on many occasions, using Homer's aged father Abe and his nursing home cronies to depict America's senior citizens as comically self-centered. In one episode, Abe yells: "I'm old. Gimme, gimme, gimme!!" This narrative is somewhat offset by a counter-narrative about "the greatest generation," but the idea that our retirees are heedlessly pampering themselves at the expense of the future seems to dominate our views of the pre-Boomer generation.

This presumption is so reliable, in fact, that the opponents of Social Security and Medicare have tried to build their political strategies around it. A disapproving term of relatively recent vintage is the "greedy geezer," which was picked up by all of the usual suspects (prominently including New York Times pundit David Brooks and deficit commission co-chair Alan Simpson) as a short-hand insult, to depict our long-term budget challenges as the result of callous generational warfare by the old on the innocent young (and the unborn). These greedy geezers, we are told, are addicted to their "entitlements" and will not allow anyone to touch them.

Apparently, the anti-government zealots came to believe their own story. At least, that is the best way to explain their political strategy in recent months in pushing a plan to dismantle Medicare. The so-called Ryan Plan, which passed the House with near-unanimous support from Republicans, would have replaced the extremely popular and efficient single-payer Medicare system with a set of vouchers that seniors would then use to buy health insurance from private insurers -- insurers who would, of course, be freed of any of the requirements imposed by the Affordable Care Act.

This bill was a terrible idea from the start, on the merits. David Cay Johnston, the Pulitzer-Prize winning tax journalist, analyzed the plan recently, describing a scenario based on Rep. Ryan's preferred forecasts as well as a scenario based on the CBO's forecasts. Because Medicare as currently constituted successfully uses the government's buying power to hold down costs, while individuals have no such power, the net cost of health care for seniors (under the voucher system, compared to today's costs) would be five times higher using Ryan's numbers and eight times higher using the CBO's numbers. In the aggregate, even after taking into account the direct reduction in the government's medical care expenditures, the new system would be $20 trillion or $34 trillion more expensive, under the two scenarios.

This bill was never about the numbers, however. It is a political statement, and it is based firmly on the idea that Republicans can use the public's supposed disgust with Greedy Geezers to finish off single-payer health care once and for all. But what to do about those Greedy Geezers themselves, who (we are reminded endlessly) vote in such large numbers? Count on their greed, and buy them off, of course.

The House Republicans are so sure that seniors are only out for themselves that they built their political strategy around the assumption that current seniors would be pacified by a very real "grandfather clause." The plan would only apply to those currently under age 55, allowing the bill's proponents to say to current Medicare recipients, "Don't worry, we're not taking anything away from you." Predictably, in stormy meetings with angry constituents during the recent Congressional recess, Ryan and his colleagues tried to use the age cutoff as a way to blunt anger over the bill. At one point, Ryan confidently told a reporter that people were no longer angry when he explained that the bill only affected younger people.

We now know, of course, that that strategy failed miserably. The politics of this issue have run so completely in favor of the Democrats that even a safe Republican House seat near Buffalo is at risk of going to a Democrat in an upcoming special election. More tellingly, the Republicans are in all-out retreat on the subject. House and Senate leaders say, predictably enough, that the public's anger is based on distortions; but they nevertheless have fully backed away from the plan. Newly-minted presidential candidate Newt Gingrich looked at the tea leaves and decided that he had to distance himself from Ryan's unpopular plan, calling it "social engineering" and "radical." (Gingrich is now experiencing his own political nightmare, because his party's base views Ryan as a demi-god, notwithstanding the broader political failure of the bill.)

It seems, therefore, that there is some danger in believing one's own myth-making. Describing all old people as greedy and selfish, and then building a political strategy on the presumption that such a description is accurate, has led to political setbacks for Republicans.

Nevertheless, we might view this as an understandable miscalculation on the Republicans' part. Even if they put too much weight on the myth, there is good reason to think that people's political positions reliably track their own self-interest. Why should we expect people over 55 to care one way or another about something that does not affect them -- or, at least, to care enough to become politically problematic for Republicans? Is it not fair to view seniors' inter-generational generosity as a surprise?

Actually, it is not at all surprising. In fact, we have seen this all play out before. In early 2005, when the Bush administration attempted to use its political capital from the 2004 campaign to begin the process of privatizing Social Security, the administration attempted to buy off seniors with promises that its plan would not affect anyone who was already receiving Social Security. The strategy did not work. Even though Republicans held the White House and majorities in both Houses of Congress, after a months-long campaign to promote the plan, it went nowhere.

The leading advocacy groups for senior citizens, notably AARP, came out strongly against privatization. One could argue, of course, that those groups were merely protecting their own interests, because they want to have a clientele in the future, after current retirees die off. That, however, would not explain the widespread disapproval of the privatization plan by the seniors themselves. It also requires one to believe that AARP's leaders could get away with spending their current members' dues on something that the current members do not care about.

One could then argue, I suppose, that the current members were being duped by their leaders into opposing the plan. At that point, however, we lose any ability to believe that political action is based on people's actual desires. Certainly, the statements from leaders and regular seniors alike at the time indicated that they were trying to do something for the benefit of their children and grandchildren. Far from being Greedy Geezers, they seemed to be acting a lot more like Considerate Codgers. (Generous Geriatrics? Equitable Elderly? Honorable Oldsters?)

No matter how cynically one views the 2005 experience, however, we know that Bush's attempt to buy seniors' silence did not work. It is rather stunning to see the new House majority so completely ignore that lesson today. Those who forget history ...